Summary: Crypto exchanges have risen in number over the past decade. What are they and what benefits do they offer to users and traders? Let’s explore the topic in depth.
What Are Crypto Exchanges?
A crypto exchange is a network that enables users to exchange or trade virtual assets for other currencies both fiat and Digital. What that means is that crypto exchanges serve as a marketplace where buyers and sellers meet to buy, sell and exchange digital assets and of course local currencies.
The role of cryptocurrency exchanges in the digital marketplace cannot be under-emphasised. These platforms have made digital assets available on a global scale, they help traders buy, sell and exchange cryptocurrency easily and securely while maintaining their privacy. Both beginners and pros in the digital currency marketplace find these indispensable.
History of Crypto Exchanges
When the first-ever crypto, Bitcoin, hit the market in 2009, people could only acquire it by mining or trading on forums and IRC. This was less than ideal because it meant ordinary people could not access the coins with ease, there was no standard rate of exchange and it depended heavily on trusting individuals involved in the transaction.
As a result of these handicaps, the first crypto exchange arrived on the scene, Bitcoinmarket.com. It was an obscure platform that is now in disuse. A member of Bitcointalk forum “dwdollar” proposed this first-ever crypto exchange.
Furthermore, while other exchange options did not have a consensus on Bitcoin price, Bitcoinmarket.com presented an exchange rate of 1 bitcoin to $0.003 when it launched. In the beginning, the trading platform used PayPal when interacting with local currencies but the payment system was too vulnerable to fraud so Bitcoinmarket.com discontinued it. Subsequently, Bitcoin continued to gain ground and as many users joined the crypto boat, it became too much for the first crypto exchange to handle.
Not long afterward, in 2010, Jed McCaleb, now associated with the Stellar Development Foundation, founded Mt. Gox which took over 80% of bitcoin trades. It supported the exchange of Bitcoin to USD, was automated, always online, and faster. Consequently, Mt. Gox grew into the biggest crypto exchange in 2013.
However, due to poor security and management, it soon crashed because of multiple long-term hacks that cost the company almost 845,000 BTC. Mt. Gox filed for bankruptcy soon afterward. Then came a parade of increasingly more sophisticated exchange platforms. Each structure, with technical improvements on the previous one with superior security measures. Soon, many other different coins known as altcoins entered the crypto market requiring larger trading pair capabilities from exchanges. With such new coins came newer and more capable cryptocurrency exchange platforms like Kraken, Poloniex, Bitfinex, Gemini, Binance, and CoinField, a Europe-based crypto trading platform.
Today’s trading platforms are truly global and versatile. CoinField serves over 187 countries, operating with over 6 fiat currencies including USD, EUR, CAD, JPY etc. It has pairing capabilities that encompass both Bitcoins and above 20 different altcoins. Buyers and sellers can trade Ethereum, Stellar Lumens, Litecoin, Digibyte and so many more on the exchange. Just an example of how far exchanges have come since the now-defunct Bitcoinmarket.com.
How Does a Crypto Exchange Work?
Buying and selling cryptos can be a cumbersome process which is where crypto exchanges come in. These entities stand in the gap as a framework to make the process of buying and selling and exchange of cryptocurrency smooth, safe, and easy. The best crypto exchanges typically offer:
- A secure platform where you can conveniently buy and sell a range of digital assets and also exchange them with Fiat.
- An easy-to-use framework
- A robust range of pairing options for Bitcoin exchange and altcoins
- Support for global transactions by enabling different local currencies.
- Flexible and low transfer/trading fees
Are Crypto Exchanges Safe?
The history of crypto exchanges proves that they have always evolved and become safer over time. The newer exchanges worldwide follow accepted safety norms that help secure transactions over the internet. Moreover, the virtual Marketplace and crypto exchanges have become more aware of the customer’s privacy needs and understand that safety comes first.
To mitigate occurrences of any type of fraud, US FinCen requires exchanges to comply with Anti-Money Laundering (AML) protocols which also involve carrying out KYC or Know your customer. KYC entails a process of collecting a customer’s details like their name, date of birth, and address and verifying them against government-issued documents. This information will further be verified against official databases to determine the customer’s potential for money laundering or other financial crimes.
European-based cryptocurrency exchange platform, CoinField which has been noted several times as one of the most secure crypto exchanges, goes several steps beyond that. It employs strict safety standards that make any breach by criminals virtually impossible.
Let’s take a look at some of these measures.
- CoinField server utilizes isolated servers hosted on one of the top secure data centers around the world. To make transactions and gain access to data, one has to work through several gateways.
- All sensitive information on CoinField is stored in a secret high-tech digital vault behind a cloud known to only specified entities.
- All digital transactions require multiple signature authentication before they are authorized.
- The exchange platform uses 3 different wallet protocols to promote maximum safety of data and assets. Cold Wallets are wallets stored offline in a safety deposit box accessible only when both of their founders are present. Hot wallets are used for accounting for virtual currencies during deposit requests. Warm wallets are for daily liquidity requirements on the platform, stored in a digital secure vault as well.
In addition to all these, CoinField enables 2FA or two-factor authentication, a suspicious activity logger, CDN to prevent DDoS attacks, and end-to-end 256-bit SSL encryption to secure all communications from their web browser to their servers.
How to Evaluate a Crypto Exchange?
Some things to consider when deciding what cryptocurrency exchange to use to buy, sell and exchange your digital assets are noted below.
- Security: An account with multiple security protocols is your best bet in these times when hackers and fraudsters are all over the crypto space.
- Currency Pairs: As a buyer or seller, you must confirm if the cryptocurrency exchange you want to use offers the currency pairs you want to exchange. Say you want to purchase ETH using USD or exchange one Bitcoin for an altcoin. The exchange will use must carry those pairs
- Transaction Fees: You would be looking for cryptocurrency exchange with the cheapest transaction fees.
How to Buy Bitcoin on Crypto Exchanges
Bitcoin is a decentralised digital currency founded by an anonymous person or persons under the pseudonym of Satoshi Nakamoto. It is the first and the biggest cryptocurrency on the digital currency market with a total supply of 21 million coins. At its launch in 2019, the digital currency was $0 but it has climbed steadily through ups and downs in the volatile crypto market to its current trading price of $30,491. Bitcoin now (at the time of writing) has a market cap of $581 billion as of the 8th of June, 2022.
Find more statistics at Statista
The cryptocurrency enjoys the support of celebrities like Michael Saylor and major organisations like PayPal and the Bank of Singapore and is increasing in adoption by the day. Some reasons for this Large-scale adoption of Bitcoin include its low transaction fees compared to traditional methods.
The digital currency is decentralised in nature which many enjoy as a way to avoid pesky government regulations. Furthermore, many online platforms now accept Bitcoin as a payment option so it is quite easy to use. Especially, with the added advantage of Bitcoin wallets that make users’ coins readily available for transactions.
Bitcoin also promotes user privacy and wallet security through a key known only to the wallet owner. Besides, as a relatively new technology, Bitcoin enjoys massive adoption because most people believe it is the future of global finance. BTC holders can buy and sell with other digital currencies and Fiat money.
Buy Bitcoin Now
You can buy and sell Bitcoin on CoinField, the most secure cryptocurrency exchange in the market by following these steps:
- Sign up on the CoinField website.
- Input your email address and create a strong password
- Confirm the terms and conditions
- Verify your email address
- Login to your account
- Complete PRO account registration by submitting documents for verification
To deposit and withdraw currencies, you will require to complete our KYC verification. This involves updating:
- A front and back view of a government-issued ID
- A recent, not later than 3 months ago, proof of address (e.g a utility bill)
- A selfie holding a note inscribed with CoinField and the current date.
That’s all you need to begin an adventurous crypto journey. CoinField also has an exchange app where you can be sure of safe trading, reasonable fees, and a wide range of pairs.
Have questions about account registration, KYC policies and others? Reach out to our support team at email@example.com.